things to realize:
Red river flows north, which is very rare.
This means thawed water flows to where the river is still frozen over, which contributes greatly to the flood.
Fargo is a relatively small town, it is NOT like New Orleans.
Because of flooding over the last 10,000 years, Red River Valley soil is very fertile...and the land is very flat. Hence we need it for food production, wheat specifically. Farming communities NEED hubs of commerance so the farmers have somewhere to go to buy clothes, appliances, farm equipment, etc.
The Red River does flood evey year. However 1997 was the first big 'century' flood in a long time. Businesses and homes put up in the 1940s and 50s had never seen a flood like it, so they built in the 100 year flood plain but stayed out of the 10 year flood plain.
We have had 2 'century' floods in 10 years. However, you don't really get a century flood every 100 years, it's more along the line of 10-20 every 1000 years. Just like a cold snap in the winter may result in a record breaking cold day on Jan 14th and then another one on Jan 18th overall weather patterns means that it is pretty common for there to be 'century' level floods relatively close together. Exaimining the flood record over time, 2 century floods that happen 10 years apart and then have a 100 year gap looks pretty much identical to 1 flood then 100 year gap.
Still, since the 1997 flood, the area where you cannot build has been expanded. No new buildings are being put in there, but some old ones survive.
Finally unlike New Orleans, Fargo is a town of hard working folk who have a lot fewer hands out begging for money. They saw the problem coming and put forth a TON of free labor to counteract it. I doubt anyone in the 7th ward or 9th ward of New Orleans would have done a 10th as much work if they had a week's notice. Also displaced Fargoites are much less likely to bring a crime surge to your city.